All Forum Posts by: Kaiser J.

No problem, and nothing to be ashamed of.  We’ve all been there and you’ll learn from this experience.  I’m sure your next deal will be fully vetted and much more successful because of this!

Unless you are willing to go look at these properties with a professional right away, you should forfeit both deposits and chalk the $4,000 loss up to a lesson learned.  You are taking out debt to buy speculative property based on a few metrics off a website, likely in a D-F class area that you don’t know.  That is not investing, that is gambling.  The suggestion that you should take out more debt, or run up credit card balances, just to close on this is reckless.  

Yes, they can be very good investments.  The best thing about industrial is that the build times are very short (~6 mos.) relative to other types of commercial such as apartments and offices.  This means that a developer can break ground based on given market conditions and open the door in fairly similar conditions, as opposed to an office/apartment developer who may be facing a very different market when they are open for business.  This leads to less volatility in the asset class since developers don't get caught off-sides and flood the market with excess supply.

Like all real estate, location is paramount. Access to highways, for example, and major metropolitan areas. The leases are great because they tend to be 3-7 years on a NNN basis.

In terms of market dynamic, try to buy in an area where spec development is currently limited by a high ratio of construction costs to rent.  

Always underwrite with an assumption that your property could go vacant for 1 year when the lease expires.  This is not an asset class that you should own without substantial reserves.

Look for a warehouse to office ratio of roughly 90/10.  Lighting upfit can be relatively inexpensive because some utilities will offer rebates for modernizing that.  Sprinkling a building is very expensive and often the biggest upfit cost.

Yes, both possible and common.  Any lender should be fine with this as long as you can qualify on your own.  Just remember that they will only give you partial credit for the rental income that it would generate, but full obligation for the associated liability.

No.  Do not lever up your primary residence to pay off debt on an investment property, particularly for so little rate savings.  If you hit a rough patch one day and default, you would have put yourself in position to lose your primary and be forced to move into your rental property (I assume these are with different lenders and not cross-collateralized). Keep things as they are and work on paying down your primary mortgage first.

It's a shrinking, rural town with few jobs or prospects.  Nobody who works in Charlotte would make that commute.  There are many growing areas that would make better alternatives and are very affordable to invest in, such as Fort Mill.

I would omit the mobile home income altogether in your cash flow analysis.  Figure out what the land, duplex, etc. is worth.  Then add a separate value for the mobile home (which can be appaised or at least approximated).  The mobile home is a depreciating asset, similar to a car.  It may cash flow but you don't want to include it by applying a cap rate to that income.

This is not uncommon.  Just talk to an attorney because you will likely have eviction rights to the extent that they do not pay after close, but the attorney will be able to ensure it's done in the right way.  The seller is unlikely to execute a lease, since the seller would be stuck in it if you do not close.  It's probably not in your best interest either, since you don't know what sort of screening the seller has done on the tenant.  Easiest way to do this is for you to have the tenants apply for a brand new lease post-close so that you can make the decision yourself.

In Excel, use either a Goal Seek function or a Data Table.  Goal seek is manual based on a single variable, Data Table will automate the purchase price output based on two variable inputs.

I live in Charlotte and invest in commercial real estate. I would be interested in chatting with you about this to learn more. I don’t know how to get in touch with people over this site yet but if you do then please feel free to reach out to me.